New Year 2019 Wishes !

Dear DividendCake followers,

we are little more than 1 day away from starting a new year 2019 ! 2018 has been quite a year from a personal and financial perspective. Allow me to reflect in this New Year Wishes Blog post and give you my opinion about three things :

• The 2019 global economy outlook and what can we expect
• Our Blog
• Our Personal Finance Strategies

The Global Economy Outlook

The global economy looks poised to slow moderately from 3.8% in 2018 to 3.5% in 2019, led by deceleration in the US and further softening in China. As there is still growth in the US, I see continued labor market tightening, possible higher policy rates with a gradually rising core inflation. With 5 more potential rate hikes, the FED does prevent overheating of the US economy, although President Trump doesn’t like the rate hikes. A further decline of the unemployment is to be expected. I already notice that higher salaries are requested and certain profiles can no longer be found in certain US states. More costs (higher salaries, tariff costs, higher debt costs,…) will eventually lead to lower profits for companies and eventually lower stock prices or higher prices for consumers accelerating the path to a recession.

China has slowed down quite a bit in 2018 mainly on the fears about a damaging trade war.  With monetary and fiscal policy now in easing mode, I expect only a modest further deceleration. The macro impact of increasing tariffs is also likely to remain manageable, even if there is further escalation in early 2019. But President Trump already tweeted that his talks with President Xi are progressing well. If you understand the Chinese business culture, you know that the fundamental and complex concept of guanxi plays its central role in Chinese culture. Guanxi is used to describe a network of contacts, which an individual can call upon when something needs to be done, and through which they can exert influence on behalf of another. As President Xi is elected for a lifetime and President Trump is only temporary, I am sure the Chinese leadership does not worry too much about these tariffs. Chinese business strategies are long term (20 – 40 years) to achieve world domination. It has been fascinating to follow the acquisitions from the Chinese investors in Europe. Saxo bank, who did recently a take over bid on the Dutch Binck bank, is in the hands of Geely, the same Chinese owners of Volvo. More and more assets are in the hands of foreign Chinese investors. It is amazing that EU institutions allow this to happen…President Trump intervenes in this case and as a businessmen he acts.

Growth in Europe and Japan has decelerated in the course of 2018, it remains above trend. This should put further downward pressure on the unemployment rate and keep the recent upward trend in wage growth intact. However, with core inflation still far below the target, I am still very pessimistic about Europe due to the slumbering unresolved Italian budget crisis, the ongoing Brexit negotiations and the risks of a first forecasted rate hike by the ECB. I think rate hikes in Europe are hard to execute because governments haven’t cleaned up their balance sheets. The Belgian government is AGAIN probably the worst in class.

So will there be a recession in 2019 is the key question everyone asks? Personally I don’t think so. Companies with large debt in the US could get in trouble with the rate hikes. Full employment and not being able to grow can limit companies’ growth. So economic growth will still be there in the USA. Europe and Japan will continue to lag behind. Will it be a stable bull market year for the stock markets ? No, I don’t think so. I think we are already in a bear market. As rates hikes kick in, stock markets will go down. Together with my mentor and our group of investors we discussed current market outlook. Two hedge fund managers in our team clearly stated that we have already entered a bear market.

Last week was a brutal week on Wall Street as the small-cap Russell 2000 and the Nasdaq both fell into bear market territory (defined by a decline of 20% or more from a 52-week high). The Dow and S&P 500 also fell closer to that dreaded 20% level. If you look underneath the surface, the action is much worse as investors continue to dump stocks. The past week the stock market was extremely volatile. We will continue to see more volatility in 2019 and this creates opportunities for traders, but also for investors who want to purchase shares at a discounted level in their eyes. Personally I stopped buying new dividend stocks or ETFs in March/April timeframe and flipped a portion of my portfolio in a short hedge position. The sharp declines from my dividend stocks were for 80% offset by my hedge position. I see no reason for taking off my hedge at this moment.

What do I wish for the stock markets in 2019 ? Actually I wish more volatility as my mentor says that is the time that most money can be made. The stock market goes up with the stairs and goes down with the elevator. The past 9 years bullish market was easy for a buy and hold investor, but volatile markets can teach you to become a better investor. If you don’t know how to make money in a downtrend market, you are not an advanced or expert investor. Volatile markets also always lead to more media coverage highlighting investors panic and scaring the beginner investor. Gert Bakelants, Chief editor of De Belegger magazine, highlighted this again in his presentation at Finance Avenue. I wish for 2019 that journalists who write such articles, would first educate themselves in financial literacy and realize that stocks have been one of the best asset classes to invest in if you learn to invest wisely. If you had invested in dividend aristocrats for the past 10 years, you would have grown your money substantially and outperformed the market. There will always be a bear market or a stock market crash. Just learn how to make money in a downtrend market. I wish for 2019 ONE journalist would write about the fact that you can also make money in a downtrend market…

You can read more about my strategies in the Personal Finance Strategy section.

 

Our Blog

In the year 2018, our blog has substantially grown in numbers of visitors per day. From 23.000 to 48.000 visits is simply amazing ! In December 2018 we crossed also 1600 visitors per day. This is a nice reward for all the effort that goes into this blog.

There’s still a lot of work to be done to educate people in financial literacy. This blog is a water drop on a hot plate… When I recently distributed business cards to people in a party, I got a lot of rejection and critics to swallow. Some people saw the stock market as very risky (They just purchased BPOST before the drop) and other people did think I was an investment advisor…. The Flemish government has recently defined financial literacy as a basic skill for teenagers and the education system will only introduce financial literacy in first class of college in 2019. Too late for our boys. I will evaluate what this means for our daughter within 2 years.

The goals for the blog website in 2019 remain very much the same :

• to share my journey on becoming a better investor and trader
• to share the financial education classes for the kids and inspire you as a parent to do the same with your teenager kids
• to share the growth (or losses) within the portfolio of my mom and kids
• to grow the money for my foster child in Nepal

I have a lot of new ideas and plans for 2019 going forward. There’s new stuff coming…just keep on following us and you will learn about it…

There are many opportunities how to grow your money. Most people simply don’t know about it…I wish you keep on following us in 2019 !

Our Personal Finance Strategy

If you visit this blog for the first time, you can read my Financial Strategy here. Our core strategy will remain dividend (growth) investing. In 2019 we will invest extra time to finetune this strategy with preferred stocks and investment trusts. We learned about investing in investment trusts during our London Investor Show visit. Time will be allocated to add those investor methods to my core strategy.

In addition to this core strategy, we created the following skills set mapping of our investor / trading knowledge.  In 2019 we will invest time in the BLUE boxes. Reading books, following webinars or courses,…are part of our 2019 gameplan. “I am always a student” is a principle that I teach the kids. 

Most investors know the principle of buy and sell of different assets such stocks, holdings, ETFs, gold, funds, bonds or any other financial product. But that is just ONE skill set for me. If you read my strategy, you will understand that I focus on ONE thing only : CASH FLOW. In 2019 I will also invest time in upgrading my trading skills. My mentor has opened a whole new world of different strategies. His investment strategy is like a SWISS knife. Dependent on the short term direction of the market or stock opportunities, he changes his strategy to generate cash flow out of the market. We will continue to share our journey with our followers on this blog.

If you are an investor and/or trader, I wish for you in 2019 an upgraded skill set. Execute a strategy and/or skills set mapping on what you know and what you don’t know… and invest the time to learn !

Final Words

Money alone doesn’t make happy, we all know that. You can live on the beach and fish every day and have complete freedom. You don’t need money to be happy ! I am fully aware of that and I hope you know this too ! But financial problems lead to a lot of headaches and misery. Mrs DividendCake followed dutch classes in university in 2018 and came home with shocking financial stories of “NEW Belgians” learning the Dutch language. Learning how to make more money is a necessity for those families. The language is the first barrier they need to conquer.

In the financial newspaper De Tijd this weekend three journalists give us 9 tips for a financial healthy 2019. Three tips (inheritance tax, fire insurance and pension savings plan through your employer) are related to changes in the law or taxes. Three tips relate to saving money in your family budget. Revise your telecom and energy supplier every year and use government premiums when investing in energy saving equipment. Number 7 is a NO BRAINER. Pay the least amount of taxes. We are already tax champions in the world… Every year they keep on inventing new ones…soon we even will pay for using the roads. Why are we paying taxes in the first place? Unfortunately I am pessimistic about the Belgian financial system and how decisions are currently made. I wish in 2019 a new party with the name BASTA should stand up and clean the house. Less political structures, less taxes, less wasting money,… That is how President Trump won the elections. People are fed up with how leaders run the political system. There will be a time that the same thing happens in Belgium.

Tip number 8 relates to your portfolio investments. Rebalancing your portfolio is something every investor needs to do. Not all investments are a home run. You cut the losers and let the winners run, is an expression that many experienced investors apply. Investing in gold is a recommendation by banks in times of uncertainty and downtrend markets.

The most important ADVICE is number 9. INVESTING IN YOURSELF is the most important asset class. Stop watching Netflix, TV, soaps that don’t teach you anything. Read a new book, learn new investment strategies. I have ONE BLUE box which says EXTRA SKILL SET. I already know what it is and will share with you early next year 2019. I hammer on the table to invest in your own financial literacy…

In 2019 I wish for you who manages your own money and wants to grow it, that you learn and learn. You will make mistakes along the way but never stop learning. Mistakes are part of the learning process and lead to success. I know I am not perfect as an investor and trader but every year I am growing…that is the growth mindset I hope you will adapt or have too in 2019 !

Last but not least you need to also enjoy using your money. Spending our money for new travel experiences is our family’s core belief. We have exciting travel plans for 2019 ! We wish you that you can also enjoy travelling the world in 2019 and have great travel experiences. Don’t hesitate to tell us where we should go.

Thanks for reading this blog post to the end.Please note English is not my native language and sorry for any English writing mistakes. Are you working out smart financial decisions or are you investing in your financial literacy ? Are you travelling to a new exciting place ? Don’t hesitate to leave your comments and feedback. Let us know what you think.